Argentine government intervention seeks to benefit wheat farmers

Confronting the problems of low wheat production and prices, Argentine President Cristina Fernandez de Kirchner announced on Monday (Jan 11) a new line of credit and a commercialisation deal to help farmers.

 

The state is intervening in the market to help maintain the price of national wheat, the president said.

 

There have been concerns that a sharp drop in wheat production may force the country, a huge farming power, to import wheat.

 

However, Fernandez said Argentina does not have to import wheat but they have to come out and sustain the price from the state so that farmers do not go down.

 

The credit line allows small and medium farmers to take out 180-day loans from state bank, Banco de la Nacion at 7% annual interest, less than the 30-day prime lending rate of up to 20%.

 

This will help so that farmers do not have to sell their wheat at a loss and can wait for better prices, added Fernandez.

 

This announcement comes a day before wheat farmers are to meet in Buenos Aires to demand measures to improve wheat prices.

 

Farmers trimmed wheat planting in the 2009-10 season to an estimated 3.1 million hectares from 4.7 million in the previous season as export controls on wheat and drought during planting time led them to shift to other crops such as the more profitable soy.

The drought extended throughout most of the growing season in the south of Buenos Aires and in the western fringe of the farm belt.

 

The Agriculture Ministry estimates production of seven million tonnes from the 2009-10 crop, down from 8.4 million tonnes in 2008-09 and 16.4 million tonnes in 2007-08. It would be the lowest since the 1989-90 season.

 

The decline in output has cut exports, which dropped 44% to 4.6 million tonnes in the first 11 months of 2009 from 8.2 million tonnes in the year-earlier period, according to the latest numbers from the National Food Safety and Quality Service (Senasa).

 

Argentina exports more than half of its wheat to Brazil.

 

As of January 7, farmers had harvested 91% of the 2009-10 wheat crop, according to the Agriculture Ministry.